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Circular on Voting in the Committee of Creditors 14th September, 2018

The Insolvency and Bankruptcy Code, 2016 (Code) prescribes voting requirements for various approvals by the Committee of Creditors (CoC). For example, section 28(1) of the Code mandates that the Resolution Professional shall not take any of the actions listed thereunder without prior approval of the CoC. Section 28 (3) further provides that no action listed under section 28 (1) shall be approved by the CoC unless approved by a vote of sixty-six percent of the voting shares. Similarly, section 30 (4) of the Code provides that the CoC may approve a resolution plan by a vote of not less than sixty-six percent of voting share of the financial creditors. Further, in terms of regulation 2 (1) (f) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (Regulations), a dissenting financial creditor means a financial creditor who voted against the resolution plan or abstained from voting for the resolution plan, approved by the CoC. In this background, an issue has been raised whether a financial creditor, who is not yet admitted as a member of the CoC, would be considered a dissenting or abstaining financial creditor.